Those who warned us during the year that the economic crisis will hit the world economy in 2023 are rejoicing these days, writes Radu Krachun in his personal blog. Finally, their predictions come true, and the crisis of 2008 will repeat itself, starting with the bankruptcy of two American banks and the crisis faced by the Swiss bank Credit Suisse. He is wrong.

Most likely, there will be no crisis, let alone one like the one in 2008.

If it started with two bank failures, that doesn’t mean that even today two bank failures will be enough to repeat it. The context in 2008 was much more complex and rotten than today, and as a result any similarities are simplistic and forced. In fact, the challenges that the business environment in Romania will face are completely different and related to a completely different “crisis” than the one you persistently propagate in the media. Note that the most expected economic recession is postponed. And those who seemed to have the best crystal ball were microeconomic decision-makers whose optimism trumped the persistent pessimism of economists.

A recent survey of ASEBUSS graduates, 30 years after the Executive MBA program was founded, shows that in the 2023 budgets, more than half plan to increase their investments, while 24% plan to maintain them. However, in defense of the pessimists who predicted a serious recession, it should be said that a severe winter would significantly change economic development.

A significant increase in gas consumption in Europe would lead to the closure of large industrial consumers in favor of domestic consumption, which would cause a domino effect for the European economy

Fortunately, this did not happen, and now we allow ourselves to prepare for the great challenge of the business environment in Romania. The main challenge I see is that in the next decade, Romanian companies will face a demand for goods and services that will be greater than they can supply.

This means that I predict that the big problem for Romanian companies will not be finding customers, but finding enough resources to meet the many opportunities they will have. And when I talk about resources, I mean primarily enough people with the necessary qualifications, I mean the capital that will allow them to make the necessary investments to expand their capabilities. How serious is the situation? I believe this is serious enough to require executives and entrepreneurs to immediately put on paper a strategy aimed at expanding the capabilities and increasing the ability of the companies they manage to offer goods and services.

For Romania, three planets align and potentiate each other, thus causing an explosion of demand for Romanian business.

But where does this urgency come from? I think that in the coming years, three planets will align for Romania, potentiating each other, thus causing an explosion of demand for Romanian business. First, it is a phenomenon that we are already observing, namely the relocation of large international companies in a process called “friend-shoring”. That is, migration from countries such as China or Russia to countries that are part of the club of Western-type liberal democracies. Being in this category, Romania has every chance to benefit, and the relocation of foreign companies to Romania will have a beneficial effect to strengthen local companies.

The second important economic stimulus will be the PNRR, a program that will make Romania the beneficiary of a €29 billion bailout funded by the European Union. This is a program about which, rightly, the chief economist of the BNR said that “the best state program we have is PNRR, whether we like it or not…”. Considering the volume of funds involved in projects for the development of infrastructure, energy, logistics, agriculture and many other areas, the demand for companies that can participate in such projects directly or on the terms of subcontracting with foreign companies will only grow.

And, finally, the third potential catalyst of demand, which is not talked about in Romania at all: the huge reconstruction project of Ukraine. Of course, it is expected that donor countries tend to redirect money to their own companies. But it’s a trend that won’t necessarily involve funding from multilateral organizations, not to mention that foreign companies will also need regional partners to join forces with.

The state and companies will have to prepare a network of commercial contacts in time, which will allow us to become part of the great process of reconstruction of Ukraine.

This means that the Romanian state and companies will have to prepare in advance a network of commercial contacts that will allow the Romanian economy to become part of the great process of reconstruction of Ukraine. It also means that Moldova will have the opportunity to develop like never before, and it also means that, as I have been saying for years, completing the motorway through the Eastern Carpathians is a zero priority.

Otherwise, the bridge of economic development of Ukraine will pass exclusively through Poland, which already has a much more important geopolitical status than Romania, from the point of view of participation in supporting Ukraine. But the three great cumulative opportunities will not only have a positive economic effect, but will also bring other challenges.

The main challenge will be related to the potential overheating of the economy, caused primarily by a shortage of the labor market. The spiral of wages, stimulated by the struggle for skilled personnel, can lead to inflationary pressure and the persistence of external deficits. Inflationary pressures will also lead to more restrictive monetary policy, which will translate into higher interest rates.

For this reason, policies at the macro-economic level to improve the quality and quantity of the available workforce, develop infrastructure and stimulate the business environment through the PNRR will be essential to take advantage of the perhaps unique alignment of the three great economic opportunities. Finally, investment in improving labor productivity to produce more with the same number of people will be essential. Will the Romanian state and Romanian companies take up the gauntlet?

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